X5 Corporate Center · RUS:X5
X5 Corporate Center — X5 Retail Group — Investor Presentation (May 2011)
34 slides from X5 Corporate Center's investor presentation, May 2011
Slide 1: Investor Presentation
1 Investor Presentation May 2011
Slide 2: Disclaimer
Disclaimer 2 This presentation does not constitute or form part of and should not be construed as an advertisement of securities, an offer or invitation to sell or issue or the solicitation of an offer to buy or acquire or subscribe for securities of X5 Retail Group N.V. or any of its subsidiaries o
Slide 3: Agenda
Agenda 3 I. Introduction II. 2010 Review III. 2011 Strategic Priorities and Long-Term Vision IV. Q1 2011 Trading & Store Opening Update V. Kopeyka Integration Update
Slide 4: X5 - #1 Russia's Retailer
X5 - #1 Russia’s Retailer 4 Russia’s Leading Food Retailers • X5‟s FY 2010 pro-forma net sales reached USD 13 billion Company FY 2010 Net % % Retail Sales in Top-10 in Total • The Company reported consolidated net sales of (USD mln)(1) Market(2) USD 11.3 billion for 2010 X5 Retail Group(3) 11,280 26
Slide 5: X5 Multi-Format Approach
X5 Multi-Format Approach 5 X5 Operates Stores for Every Lifestyle and Family Budget Soft Net selling space: from 300 to 800 sq.m. Discounters Average assortment: 3,000 SKUs Pricing policy: Lowest price in the market on 100% of assortment Value proposition: Price and convenience Supermarkets Net sell
Slide 6: Benefits of X5 Multi-Format Strategy
Benefits of X5 Multi-Format Strategy 6 X5’s Multi-Format Approach Enables the Company to: • Appeal to diverse customer segments and regional demographics • Ensure a balance between growth and profitability • Scale efficiencies in purchasing power, IT and supply chain logistics • Respond effectively
Slide 7: Regional Presence
Regional Presence 7 North-West region As at 31 March 2011, X5: Central region X5 discounters: 370 X5 discounters : 577 • Multi-format presence in 52 cities of European X5 supermarkets: 34 X5 supermarkets: 173 Russia, the Urals and Ukraine X5 hypermarkets: 17 X5 hypermarkets: 14 St. Petersburg Conven
Slide 8: Distribution Infrastructure
Distribution Infrastructure 8 DC locations as at Fruit & Region # of DCs 000 sq. m. Dry Veg Veg. Fresh Frozen Non-Food 31 March 2011(1) Central 9 217.7 v v v v v North-West 5 70.4 v v v v Volgo-Vyatsky 1 17.5 v v v Urals 5 34.7 v v v St. Petersburg Centralno- Chernozemny 1 23.5 v v v v Pskov Veliky
Slide 9: Agenda
Agenda 9 I. Introduction II. 2010 Review III. 2011 Strategic Priorities and Long-Term Vision IV. Q1 2011 Trading & Store Opening Update V. Kopeyka Integration Update
Slide 10: 2010 Milestones
10 2010 Milestones Sales X5 delivered on full-year revenue growth target with 24% consolidated net sales growth in RUR terms Reported solid LFL sales growth of 7% in RUR terms Recorded over 1.2 billion customer visits Store Openings Added record 437 stores net of Kopeyka acquisition M&A Ac
Slide 11: Retail Law and Its Implications
11 Retail Law and Its Implications New Retail Law Came into Effect as of 1 February 2010. Provisions Related to Relationships with Suppliers Became Effective as of 1 August 2010 2010 Implications for Key Restrictions 2010 Implications EstimatedEstimated 2011 Impact Effect on X5 forRetailers Retailer
Slide 12: 2010 Operational Performance
12 2010 Operational Performance • For 2010 X5 reported net sales of USD 11,280 million - a year-on-year increase of 29% in USD terms 2010 LFL Performance by Format(2) Based on RUR- • In RUR terms net revenue for the year increased 24%, denominated gross sales which comprises 7% LFL sales growth, 15%
Slide 13: 2010 Selling Space Expansion
2010 Selling Space Expansion 13 Record Organic Store Openings and Kopeyka(1) Acquisition Added Nearly 1,100 Stores for 2010 Selling Area by Format • In 2010 X5 added net 1,097 stores or 492 th. sq.m. of selling space 1% 19% 23% – 353 soft discounters – 26 supermarkets 20% – 13 hypermarkets 37% – 45
Slide 14: 2010 P&L Highlights
2010 P&L Highlights 14 USD mln FY 2010(1) FY 2009 % change y-o-y Net Sales 11,280.5 8,717.4 29% incl. Retail 11,248.1 8,674.5 30% Gross Profit 2,628.8 2,107.9 25% Gross Margin, % 23.3% 24.2% SG&A (2,224.4) (1,740.6) 28% % of revenue 19.7% 20.0% ESOP Expense (63.2) (59.3) 6% % of revenue 0.6% 0.7% EB
Slide 15: Key P&L Developments
Key P&L Developments(1) 15 Full year 2010 Net Sales increased 24% year-on-year in RUR terms to RUR 342,580 mln or 29% in USD terms to USD 11,280 mln Full year 2010 Gross Profit totaled USD 2,629 mln, for a Gross Margin of 23.3% - a 90 bp decline compared to 2009, which is attributable to continu
Slide 16: Liquidity Update
Liquidity Update 16 • X5‟s total debt rose by USD 1,741 million, which is attributable to the acquisition of Kopeyka that was financed with long-term debt in addition to absorbing Kopeyka‟s borrowings in the amount of USD 599 million (net debt of Kopeyka stood at USD 534 million). • X5‟s short-term
Slide 17: Agenda
Agenda 17 I. Introduction II. 2010 Review III. 2011 Strategic Priorities and Long-Term Vision IV. Q1 2011 Trading & Store Opening Update V. Kopeyka Integration Update
Slide 18: 2011 Strategic Priorities
18 2011 Strategic Priorities Customer Focus on formats‟ value propositions Focus Further assortment improvements: local sourcing, private label, non-food Organic Step-up in new store openings Expansion Special focus on discounters, selective openings of supermarkets and hypermarkets Moscow
Slide 19: 2011 - Healthy Cash Flow
19 2011 - Healthy Cash Flow Investing Cash Flow - organic Investing Cash Flow - M&A Operating Cash Flow One-off Retail Law effect USD mln 629 734 427 378 (245) (458) (189) (899) (997) (1,090) (659) 2007 2008 2009 2010 2011F (1) 2011F cash flows – not according to scale.
Slide 20: Long-Term Vision: National Champion in Retail
20 Long-Term Vision • Successful Implementation of Multi-Format Strategy Creating National Retail [Champion] Leader? • Low Cost, Best-in-Class Retail Operations • Moscow and St. Petersburg as Cash Generators Support Growth of Regional Operations National Champion in Retail
Slide 21: Agenda
Agenda 21 I. Introduction II. 2010 Review III. 2011 Strategic Priorities and Long-Term Vision IV. Q1 2011 Trading & Store Opening Update V. Kopeyka Integration Update
Slide 22: Russian Macro Trends
Russian Macro Trends 22 State Duma Elections in December 2011 and Presidential Elections in April 2012 are Expected to Be Supportive for Russian Consumer Market Environment Unemployment Real Wages Growth vs Real Retail Sales Growth 8 12% 30% 20% 6 9% 10% 4 6% 0% 2 3% -10% 0 0% -20% Apr-09 Oct-09 Apr
Slide 23: Russian Macro Trends
Russian Macro Trends 23 Favourable Trends in Consumer Sentiment Expected in H2 2011 Inflation Dynamics, y-o-y Consumer Confidence Index in Russia 20% 5% 20% - 15% 15% (5%) (10%) 10% (15%) 10% 5% (20%) (25%) 0% 5% (30%) -5% (35%) 0% (40%) -10% 1Q05 1Q06 1Q07 3Q07 3Q08 3Q09 1Q10 1Q11 3Q05 3Q06 1Q08 1Q
Slide 24: Q1 2011 Operational Results
Q1 2011 Operational Results 24 • Q1 2011 consolidated net retail sales increased 48% year-on- Q1 2011 Net Retail Sales (1) year in RUR terms to RUR 111,989 mln and 51% in USD terms RUR billion USD million to USD 3,826 mln on the back of Trading up trends +51% Strong recovery in supermarkets +48%
Slide 25: Q1 2011 LFL Results
Q1 2011 LFL Results 25 • Discounters continued to deliver solid performance Supermarkets’ Q1 2011 LFL Performance(1) against last year‟s high comparable base, when the Based on RUR-denominated format‟s LFL sales growth totalled 17% gross sales + 36% Basket Traffic • Supermarkets demonstrated outstan
Slide 26: Agenda
Agenda 26 I. Introduction II. 2010 Review III. 2011 Strategic Priorities and Long-Term Vision IV. Q1 2011 Trading & Store Opening Update V. Kopeyka Integration Update
Slide 27: Kopeyka Integration… Fast-Tracked to One Year
Kopeyka Integration… 27 … Fast-Tracked to One Year Purchasing • As Russia‟s largest retailer, X5 has better purchasing terms than Kopeyka, and we have moved swiftly to capture synergies from enhanced purchasing power. Full integration of the purchasing function is expected to happen by the end of 20
Slide 28: Kopeyka Stores Rebranding Schedule
Kopeyka Stores Rebranding Schedule 28
Slide 29: Kopeyka Stores under Pyaterochka Banners
Kopeyka Stores under 29 Pyaterochka Banners EXTERIOR EXTERIOR BEFORE AFTER INTERIOR INTERIOR
Slide 30: Kopeyka Stores under Pyaterochka Banners (cont'd)
Kopeyka Stores under 30 Pyaterochka Banners (cont’d) SHELVES SHELVES BEFORE AFTER SELLING SPACE SELLING SPACE
Slide 31: Kopeyka Store Personnel Training
Kopeyka Store Personnel Training 31 Staff trained Training Total staff to Branch centres as of be trained • Store management staff is trained in X5‟s training 11.04.2011 centres (3 to 5 people from each store) Volgo-Vyatsky 2 349 349 Centralno- • Basic staff is trained in stores 2 217 292 Chernozemn
Slide 32: Appendices
Agenda 32 I. Introduction II. 2010 Review III. 2011 Strategic Priorities and Long-Term Vision IV. Q1 2011 Trading & Store Opening Update V. Kopeyka Integration Update Appendices
Slide 33: X5 Share Capital Structure
X5 Share Capital Structure 33 0.1% 30.3% Alfa Group Founders of Pyaterochka 1.8% 47.9% X5 Management Free Float Treasury Shares 19.9% Total number of shares – 67,893,218 Equivalent of 271,572,872 GDRs
Slide 34: Contact Information
Contact Information 34 IR Department Contact Details Anastasiya Kvon Egor Voytenkov Senior IR Manager Senior IR Manager X5 Retail Group N.V. X5 Retail Group N.V. 28 bldg., 4, Sr. Kalitnikovskaya, 28 bldg., 4, Sr. Kalitnikovskaya, Moscow, Russia Moscow, Russia Tel.: +7 (495) 662 8888 ext. 22-452 Tel.